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Keywords (or adwords or keying) are terms (words or phrases)
sold by search engines to advertisers. When an Internet searcher types the
keyword into a search engine, an advertisement related to the keyword appears.
For example, typing the keyword "patent" might trigger specific ads by Nolo for
its patent products. Trademark issues sometimes arise when keywords are
trademarks — for example a competitor of Nolo buys "nolo" as a keyword. As a
general rule, the practice is not illegal in the United States (although
results are not always predictable when parties litigate). Using a rival
company's keyword is much more likely to become illegal when the competing
company's name also appears in the paid advertisement that is triggered by the
keyword.

EXAMPLE: MotelCo buys the keyword 'Hotelco', the trademark of a competitor. When an
Internet searcher types in 'Hotelco,' a paid advertisement for MotelCo appears.
This practice has been found to be legal in the U.S. But if the ad that is
triggered says something like "Get HotelCo Services at Half the Price" or "Hotelco
Services Available Here," then Motelco has gone too far and is liable for
trademark infringement.

Are Consumers Confused?

The key issue, as with most trademark disputes, is whether
consumers are confused. When consumer confusion is not found, the practice is
permitted. (3Gov't Employees Ins, Co. v. Google (2004).)
Similarly, a court held that consumers were not confused by Google’s sale of
the keyword "Geico." (GEICO v. Google, 330 F.Supp.2d 700 (2004).) In a 2004
case, Netscape sold the keywords "playboy" and "playmate" to explicit websites
and, as a result, users searching for Playboy magazine were confronted with
advertisements for sites with sexually explicit content. The court of appeals
sent the case back to determine if consumers were confused as to the source of
the generated ads. (Playboy Enterprises v. Netscape Communications (2004).) A contrary result seems to have been reached
in Rescuecom Corp. v. Google Inc. (2009). Rescuecom sued
Google over its sale of Rescue.com trademark as a keyword to trigger
competitors’ ads. The Second Circuit Court of Appeals permitted the case to go
forward because 15 United States Code Section 1127 defines “use in commerce” to
include when "displayed in the sale or advertising of services." In a related
keyword case, a district court ruled that a company could allege trademark
infringement when a competitor's sponsored link was triggered by its trademark
and also included within the sponsored ad. (Romeo & Juliette Laser Hair
Removal, Inv. B. Assara I L.L.C.(2009)). The
issue becomes even more complex when companies do business outside the United
States. A French court ruled against the sale of trademarks as keywords in
2005.

Consult With an Attorney If ...

Keyword purchasing is a fairly complex area of law and as
with all Internet legal issues, it's not always clear whether the practice of purchasing a competitor's trademark as keyword is
legal. You should consult with an attorney if a competitor has sent you a
legal letter demanding that you stop your practices, or if you are commencing
the practice and are concerned whether a competitor will object.